While the SPY and QQQ have been advancing, the NYSE ($NYA) and both SP400 (MDY) and SP600 (IJR) are pulling back. The rally has already begun to fade away outside of the Nasdaq and SP500. Stochastics have topped on all three and participation is deteriorating.
After reaching the 200-day EMA, the NYSE began to pull back. Participation is thinning but at this time the Silver Cross Index is rising out of oversold lows.
MDY didn't even make it to the 200-day EMA nor to October highs before reversing. Participation is also thinning with the Silver Cross Index beginning to decelerate.
IJR did manage to reach resistance at its mid-October highs, but reversed before reaching the 200-day EMA. Participation is also thinning on this index with a decelerating Silver Cross Index.
Conclusion: While the large-cap indexes continue to inch higher, the rest of the market is pulling back. More than likely we will see the same occurrence for the SPY and QQQ, but in all cases the Silver Cross Index is rising above its signal line. This tells us to expect an eventual upside reversal when support levels are reached again.
The DecisionPoint Alert Weekly Wrap presents an end-of-week assessment of the trend and condition of the Stock Market, the U.S. Dollar, Gold, Crude Oil, and Bonds. The DecisionPoint Alert daily report (Monday through Thursday) is abbreviated and gives updates on the Weekly Wrap assessments.
Watch the latest episode of DecisionPoint on StockCharts TV's YouTube channel here!
MARKET/INDUSTRY GROUP/SECTOR INDEXES
CLICK HERE for Carl's annotated Market Index, Sector, and Industry Group charts.
THE MARKET (S&P 500)
IT Trend Model: NEUTRAL as of 9/22/2023
LT Trend Model: BUY as of 3/29/2023
SPY Daily Chart: The market managed to eke out a gain. Unfortunately it also formed a bearish filled black candlestick. This means that while price closed higher on the day, it closed beneath the open. That's not a favorable condition.
The VIX popped higher on our inverted scale suggesting that investors are complacent and not particularly worried. Stochastics are rising above 80 so we have internal price strength.
Here is the latest recording from 11/6:
S&P 500 New 52-Week Highs/Lows: We pointed out a negative divergence on New Highs yesterday, it is still there. The 10-DMA of the High-Low Differential is rising strongly, but is arriving at near-term overbought territory.
Climax* Analysis: There were no climax readings today.
*A climax is a one-day event when market action generates very high readings in, primarily, breadth and volume indicators. We also include the VIX, watching for it to penetrate outside the Bollinger Band envelope. The vertical dotted lines mark climax days -- red for downside climaxes, and green for upside. Climaxes are at their core exhaustion events; however, at price pivots they may be initiating a change of trend.
Short-Term Market Indicators: The short-term market trend is UP and the condition is OVERBOUGHT.
Swenlin Trading Oscillators (STOs) are still contracting despite another day of rally. The fact that the market hasn't turned over yet given their steep decline suggests internal price strength. However, we do expect a decline given the additional shrinkage on %Stocks > 20EMA and %PMOs Rising.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL.
The ITBM has now hit positive territory for the first time since August. %PMO Xover BUY Signals are still rising and are getting somewhat overbought. The indicator is likely to move lower given we aren't seeing an expansion in PMOs Rising. Currently, the reading for both indicators are the same.
PARTICIPATION: The following chart objectively shows the depth and trend of participation in two time frames.
- Intermediate-Term - the Silver Cross Index (SCI) shows the percentage of SPX stocks on IT Trend Model BUY signals (20-EMA > 50-EMA). The opposite of the Silver Cross is a "Dark Cross" -- those stocks are, at the very least, in a correction.
- Long-Term - the Golden Cross Index (GCI) shows the percentage of SPX stocks on LT Trend Model BUY signals (50-EMA > 200-EMA). The opposite of a Golden Cross is the "Death Cross" -- those stocks are in a bear market.
The market bias is NEUTRAL in the short term.
The market bias is BULLISH in the intermediate term.
The market bias is BEARISH in the long term.
We have moved the bias in the short term to "Neutral". %Stocks > 50EMA is no longer reading above 50%. The Silver Cross Index continues to rise above its signal line giving us a Bullish bias in the intermediate term. The Golden Cross Index topped yesterday but was flat today. It remains beneath its signal line so the long-term bias is Bearish.
BIAS Assessment: The following table expresses the current BIAS of various price indexes based upon the relationship of the Silver Cross Index to its 10-day EMA (intermediate-term), and of the Golden Cross Index to its 20-day EMA (long-term). When the Index is above the EMA it is bullish, and it is bearish when the Index is below the EMA. The BIAS does not imply that any particular action should be taken. It is information to be used in the decision process.
The items with highlighted borders indicate that the BIAS changed today.
_____________________
CONCLUSION: The SPY and QQQ are still rallying, but the rest of the market is in pullback mode. We would look for the same from the large-caps shortly given the numerous negative divergences and contracting short-term indicators. The intermediate-term picture is still positive with a bullish bias and rising IT indicators. For now we would expect a pullback to be short-term in nature. However, if we do see the large-caps turn over combined with a continued decline on the NYSE, this could morph into something more sinister than a short-term pullback. For now, we will trust our IT indicators that any decline will be brief and not too painful.
Erin is 60% long, 0% short.
Have you subscribed the DecisionPoint Diamonds yet? DP does the work for you by providing handpicked stocks/ETFs from exclusive DP scans! Add it with a discount! Contact support@decisionpoint.com for more information!
BITCOIN
Yesterday's comments still apply:
"Bitcoin has formed a bull flag. The flag, however, is rising and not falling. Typically rising flags don't conclude with another flagpole. The PMO has angled over and the RSI is very overbought. We also see Stochastics slipping a little bit. We expect Bitcoin will hold up longer."
INTEREST RATES
Yields continued to spiral lower in the long term. Bond funds are looking far more attractive.
The Yield Curve Chart from StockCharts.com shows us the inversions taking place. The red line should move higher from left to right. Inversions are occurring where it moves downward.
10-YEAR T-BOND YIELD
The decline continued for the 10-year yield. The rising trend is about to be challenged as well as horizontal gap support. The PMO and RSI are very negative and Stochastics topped today. We expect support will be broken with the next level available at 4.1%.
BONDS (TLT)
IT Trend Model: SELL as of 5/16/2023
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Yesterday's comments still apply:
"There is now a clear declining trend on the 20-year yield. This should afford TLT the opportunity to test overhead resistance around 91. The RSI and PMO are configured positively so we would look for higher prices on long bonds."
DOLLAR (UUP)
IT Trend Model: BUY as of 8/3/2023
LT Trend Model: BUY as of 5/25/2023
UUP Daily Chart: Yesterday's filled black candlestick resolved as we would expect with a decline. It wasn't much of one but it did set up another bearish candlestick. This time we have a bearish engulfing candlestick. The RSI is negative and the PMO is in decline which suggests more downside. However, Stochastics turned back up so we would expect the 50-day EMA to hold up as support a bit longer.
GOLD
IT Trend Model: BUY as of 10/23/2023
LT Trend Model: BUY as of 10/20/2023
GLD Daily Chart: Gold had its worst day in some time. Support has been reached, but the PMO looks especially bearish right now as it nears a Crossover SELL Signal. Stochastics are also very negative. While price did hit support, we don't expect it to hold.
GOLD Daily Chart: The next support level for Gold is around 1900. We should expect that level to be tested given the very negative indicators.
GOLD MINERS Golden and Silver Cross Indexes: Gold's bad day rubbed off on Gold Miners which crashed. Price is about to recapture the intermediate-term declining trend. Support has arrived for Gold Miners so we wouldn't count them out just yet. Participation has taken a hit, but it isn't non-existent. Stochastics do look terrible and the PMO has topped. Tighten stops on your Gold Miners.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 11/7/2023
LT Trend Model: BUY as of 8/3/2023
USO Daily Chart: Crude dropped below the next support level at the August low. We see a giant double top formation and the decline of the last two days have confirmed the pattern. The minimum downside target would take price to about 62.50. While we aren't certain the decline will go that low, we do expect the May top and mid-July low to be tested.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
(c) Copyright 2023 DecisionPoint.com
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.
NOTE: The signal status reported herein is based upon mechanical trading model signals, specifically, the DecisionPoint Trend Model. They define the implied bias of the price index based upon moving average relationships, but they do not necessarily call for a specific action. They are information flags that should prompt chart review. Further, they do not call for continuous buying or selling during the life of the signal. For example, a BUY signal will probably (but not necessarily) return the best results if action is taken soon after the signal is generated. Additional opportunities for buying may be found as price zigzags higher, but the trader must look for optimum entry points. Conversely, exit points to preserve gains (or minimize losses) may be evident before the model mechanically closes the signal.
Helpful DecisionPoint Links:
DecisionPoint Alert Chart List
DecisionPoint Golden Cross/Silver Cross Index Chart List
DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
Bear Market RulesERT: 11-06-2023